When it comes to making money with crypto, a couple of things come to mind. You have traded it, you have staked it. Actually, thinking about it now, you have a lot of ways to make money with crypto, but if you’ve been in the space for a minute, you’ve probably heard of something called crypto mining. Maybe you’ve seen those crazy mining farms in China with warehouses filled to the top with miners or maybe you’ve seen people making videos on it on YouTube testing it out and seeing how much they can make for mining. I’m almost guaranteed that you’ve heard of it in some shape or form and you’ve probably heard of the costs associated with mining as well.
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Ranging from a couple hundred dollars to well over a thousand dollars to get the proper equipment just to start mining. So you start to wonder if it is even worth mining crypto at this point, or should I just buy a coin and hold it? So what is crypto mining now? I think this is a question that is very hard to answer because there are hundreds of different things that go into answering this one question.
What is crypto mining & how it works
So, what’s the simple answer to what is crypto mining? Mining is a process that bitcoin and several other cryptocurrencies use to generate new coins and verify new transactions, in return for us miners contributing our processing power and hardware, we’re rewarded with new coins. Think of it like a big cycle: the miners maintain and secure the blockchain, the blockchain awards them the coins, and the coins provide an incentive for the miners to maintain the blockchain.
The thing is, cryptocurrency mining is very tedious, requires a lot of patience, a lot of money, and rewards only occasionally. Nonetheless, there are still many people that go into mining because of the fact that miners receive rewards for their work. I’m pretty sure it ties back to the entrepreneurial sense, where people see this as a way to make some extra money and escape the rat race, as they call it.
This is a good thing because we need these miners because without them, there essentially is no bitcoin, there is no crypto currency. They are the backbone of everything that happens.
Is it worth it….?
Okay, that was my brief explanation of what crypto mining is. Hopefully, I’m still under that four minute mark because I’m just getting started. So with all this, it isn’t even worth mining crypto anymore. The answer is that it depends. A decade ago, anyone with a decent home computer could participate in mining crypto, but as the blockchain has grown and the power required to maintain it has increased as well, it requires about 12 trillion times more computing power to mine one bitcoin than it did when the first blacks were mined in January 2009.
Not to mention, there are huge companies and groups that are able to buy millions of dollars of equipment just to mine crypto now. The largest mining farm is in China, and it mines 750 bitcoins a month and spends about 1.2 million dollars on electricity a month. It mines approximately 3% of all Bitcoin.
I don’t know if this is feasible for you guys, but I’ve got some time before I can dish out a milly every single month on electricity, but because of the cost and the huge competition from other people, it’s become difficult for individuals like you and me. Start mining bitcoin or any other cryptocurrency on your own and make it worthwhile for us.
If you plan on mining, it’s best to keep these four things in mind before you start.
- the first is the cost of power. What is your electricity rate? Keeping in mind that rates change depending on the season, the time of day, your location, and many other factors,
- looking at efficiency. If the amount of power your system uses to mine is feasible to have in your home, it will have an impact on your day-to-day life.
- the time. What is the anticipated length of time you will spend mining crypto, and does it make sense for you to mine for that long as well
- this leads to profitability. You’re essentially mining for one reason: to make money. So will you be making money from what you’re mining? Does the future outlook look promising for that coin? Is it worth the upfront cost that it’ll cost you?
These are all great questions you should have answered before you start mining crypto.
In order to mine bitcoin, ethereum, or any other coin, you need special equipment in order to do so because you’re basically solving very complex mathematical problems that our basic computers can’t handle. So you need to go out and buy GPU A6 CPU Miners, but the thing is, I’m sure you’ve seen other people talking about this as well, as in the past two years, we’ve seen the prices of these computer parts increase dramatically. Skyrocket GPU prices have gone through the roof and now cost at least a thousand dollars for a decent one. You used to be able to get one for half the cost, and you’re looking to spend anywhere from a couple hundred dollars to over ten thousand dollars just for a basic mining rig, so you have to ask yourself if it is worth the investment.
If you do plan to make the investment, one good thing about this is that your parts are always in demand, so if you ever want to sell your rig, you can pretty much make your money back unless the resale market for those items falls, then you’re screwed.
If that upfront initial cost seems too daunting, what you can do is join what is known as a mining pool, which is a group of miners who work together and share the rewards. Now this can increase the speed and reduce the difficulty of mining, making it more profitable for people like you and me.
A lot of people are choosing to participate in these pools nowadays because it just makes more sense, even though the overall reward decreases because it’s shared amongst multiple people. So, with all of this said, I’m sure you’ve gotten the impression that mining cryptocurrency isn’t the most rewarding, but I don’t want you to think that crypto mining as a whole is unprofitable because you can make money from it, but is it worth your time and money?
Top crypto’s to mine right now
All right, what coin should you be mining now? The most profitable coin to mine right now is Ethereum. And you might be thinking to yourself, “Well, that won’t be much longer because they’re moving to a proof of stake model.” And yes, you’re right, but we don’t know exactly when this will happen. It is set to happen sometime in the summer of this year, but there are rumors out there that it’ll get pushed back even further, maybe for another year. So that means you have another year of mining crypto.
When we’re looking at the profitability of mining ethereum, it really depends on the GRU you have, but to make things realistic, let’s say you have a solid GPU that costs about $1500. From what I’m seeing online, with that, you’ll probably be making around $5 per day. So if you did this for a year’s time, you would make around $1800 and have $300 in profit from your $1500 investment, which is a pretty good 20% return on your money.
Now the real money comes from buying multiple GPUs, and these are the big rigs people create that make them a lot more money. Now there’s more risk because there’s more upfront costs, but there’s also a lot more reward with it as well. The concern here is that we don’t know when Ethereum will be gone for miners and I don’t want you guys to get stuck with an expensive GPU, so just keep this in the back of your mind when you’re researching that Ethereum mining will not be around forever. Yes, you could just start mining something else once the merge happens, but you don’t know if it will be nearly as profitable as ethereum.
Another coin to look into mining is Ravencoin. Ravencoin is actually a fork of the bitcoin code, so it’s pretty much very similar to bitcoin. It’s open source, it’s decentralized, and it has has but since Ravencoin was launched in 2018, it has had some upgrades that make it very interesting to me.
The first is its algorithm, called KAWPOW, which sounds really funny, but fixes a huge issue. This new algorithm will be ASIC-resistant, which means it will benefit from all of the mining farms that currently dominate the bitcoin world.
Being resistance to these farms also helps decentralization because one farm can’t control a majority of the hash power. This is going to help a lot of the little guys at home, like me and you, mining on our GPUs, and will allow us to mine without competing with these large farms and thousands of computers, basically evening out the playing field.
Now I will say I’ve heard complaints of Ravencoin’s algorithm running computers really hot, which could be a concern. More heat is not just bad for an individual that has a rig in their house because their house might become a sauna, but it can also lead to computer failures and fires, and the worst thing any miner can do is burn down and all that hardware become useless. Keep an eye out for that if you plan on moving forward with Ravencoin and make sure your rigs can handle all that computing power.
Next up, we have helium. If you’re unfamiliar with helium, I don’t think you’re in the crypto space as much because this is something everyone’s talking about, but it’s a decentralized wireless network that is setting out to change the whole process of getting wireless connection to low-power devices.
You’ve probably heard about or seen these helium miners that have been getting a ton of buzz lately, where you can sometimes just set them up and start making money from them. These miners are also called hot spots, and they can cost about $500, which is a lot cheaper compared to the cost of mining bitcoin or ethereum, and the cool thing is that they can run on helium. It doesn’t require any fancy setup. All you have to do is buy the miner and plug it into any regular outlet and you’re good to go.
So what’s the profitability of mining helium? Well, the truth is it’s not that great anymore. Helium has grown so much in the past year that it’s now in 170 countries, over 55 000 cities, and big names like DISH Network are getting behind the technology.
If helium hot spots had just been popping around everywhere like wildfire, it would have reduced how much HNT or its native token you’re actually getting because you’re getting paid for transferring data and now you’re competing with so many other people back in the day mining helium.
If you were one of the early adopters, you would be making about a $100 a day but now it’s sitting anywhere in between a dollar to five dollars a day. I mean, this is just what happens in a saturated market. The people who got in from the jump usually make the most money, and those that get in later make less.
However, if you’re still interested in this, you’d be looking at about $800 a year, which isn’t too bad considering the machine costs about $500 dollars. Just remember a lot of things go into how much you can actually make with mining helium, especially your location, so look into it if it’s even worth it for where you live currently.
At the end of the day, you have to understand that crypto mining is not a get rich quick thing. It requires a lot of patience, time and money and to be honest, a lot of cryptos you can mine right now are probably just not worth your time and risk. There are a lot of new options coming up where you don’t need a huge upfront investment, like how helium is. There are a couple coins out there that you can mine straight from your phone, but because of this convenience and low risk, you won’t be making as much either.
I guess you just have to ask yourself, would you rather have the daily payouts and make money every single day, or would you rather just buy the coin at the price it’s at right now and just wait for it to go up?
[This article is a transcription of a video made by Faares Q]Original video: https://youtu.be/gkROn7pF-vU ]
